Business and Society

No single sustainable investor type

August 31, 2011 | 1 min read

In their paper, “A Tale of Values-Driven and Profit-Seeking Social Investors”, the researchers emphasize that ‘sustainable investment’ has become a catch-all concept that appeals to different types of investors. This makes it hard to know whether a person is making sustainable investments because they expect a high return, or because they are prepared to sacrifice return on investment in exchange for socially responsible choices.


The researchers argue that there is clear segmentation in sustainable investment. One group of sustainable investors is clearly guided by ethical considerations and avoids socially controversial shares, even if this choice has a negative impact on investment return. In fact they specifically avoid many shares offering good financial returns, especially those of companies working in the tobacco, alcohol or weapons industries.

At the same time, however, another group of investors expects sustainable investments to perform relatively better in the long term, because they believe that firms’ stock prices do not fully reflect the economic benefits of doing business in a responsible way. Past research has already shown that stocks of companies that perform well regarding environmental performance and employee relations have shown remarkably high returns.

Different in practice

In practice investors often attach importance not to ethics or to profitability alone, but rather to a combination of both factors. In the researchers’ view, these two antithetical effects thereby largely cancel each other out.

According to Derwall, Koedijk and Ter Horst, more research into the motives of socially responsible investors is needed; current research, which aims to explain how asset managers can meet the ethical needs of investors, is still in an early stage.

Follow-up research will also be relevant to institutional asset managers, such as pension fund managers, because they may not act in accordance with their members’ wishes if they are unaware of their members’ expectations in this area. For instance, members might want a number of different investment portfolios with different ethical choice and profit profiles.


This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “No single sustainable investor type”, Jeroen Derwall, Kees Koedijk and Jenke ter Horst,, August 31, 2011.

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Research Paper


Kees Koedijk
Professor of Financial Management, Tilburg University and Dean of TiSEM

Jeroen Derwall
Assistant Professor, Tilburg Sustainability Center

Jenke ter Horst
Professor of Portfolio Management, Tilburg Sustainability Center

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